To The Moon

Since US stocks raised the expectation of raising interest rates, the NASDAQ index fell 11% this year, and the VanEck Vectors Semiconductor ETF represented by high growth and overvalued value fell 18%.

A proper bear market is a sense of vision.

One side is sea water and the other is fire. Consumer and medical stocks that lost the index last year began to soar against the wind in 2022.

For example, Costco and Wal Mart, the cheapest supermarket stocks, hit record highs, while Regeneron Pharmaceuticals , AbbVie and Eli Lilly hit record highs. Consumption and medicine are in a proper bull market.

Why is that? Can it last?

Personally, consumer and pharmaceutical stocks underperformed the market in 2021, which is "low" compared with technology stocks such as semiconductors.

For example, the NASDAQ Biotechnology Index (NBI index) and the S & P Biotechnology Index (spsibi index) lost the S & P 500 (spy) and the NASDAQ Composite Index (CCMP index) in 2021.

Costco, for another example, significantly underperformed the Nasdaq 100 index from 2020 to 2021:

Smaller gains often seem safer, and health care and consumer stocks are more comfortable in dealing with Chase inflation. Therefore, they are favored by hedge funds.

Meanwhile, Costco received good news. Its sales in March were US $21.6 billion, an increase of 18.7% year-on-year; In the nearly five weeks ended April 3, comparable sales increased by 17.2% year-on-year.

This exceeded analysts' expectations.

Behind Costco's accelerated growth, the global average price of gasoline per gallon was 46% higher this year, which had a positive impact on sales of 5.7%.

Thus, when the world economy is worried about high oil prices and chase inflation, Costco seems to be a beneficiary stock.

This optimism naturally led to the rise of Wal Mart's share price.

However, under the historical high of supermarket stocks, we have to beware of the risk of high valuation. At present, Costco's dynamic price earnings ratio (TTM) is as high as 47 times, which is at an all-time high:

From the perspective of revenue, Costco's revenue growth over the years is not fast, at about 10%. Even if it benefits in the era of great inflation, Costco is obviously not a growth stock:

However, from the profit side, Costco's rapid growth in recent years is mainly due to the improvement of profitability, in which the net interest rate increased from 1.99% in 2017 to 2.8% in 2021:

The increase in net profit margin also occurred in Wal Mart. In fiscal 2018, Wal Mart's net profit margin was 2.66%, which has increased to 3.17% in fiscal 2022.

If Costco's net profit margin continues to rise, it can hold with a price earnings ratio of 47 times.

In terms of pharmaceutical stocks, it seems that the valuation advantage is more obvious. For example, the price earnings ratio of renewable yuan is only 10 times:

In terms of performance, led by the blockbuster Eylea and REGEN-COV, the revenue is in a state of rapid growth：

Maybe it's because regenerant relies heavily on Eylea, a blockbuster product, and the profits generated by neocoronavirus antibody are unsustainable. Especially at the moment of Pfizer's mass production of specific drugs, Bloomberg analysts unanimously expect the profit to fall to $5 billion in 2022.

Of course, even based on this calculation, the P / E ratio of Regeneron Pharmaceuticals . is only 15 times.

From the perspective of R & D investment, Regeneron Pharmaceuticals is willing to invest, and the long-term prospect is worth looking forward to:

With low valuation and minimal increase, the increase of stock price is huge if any valuation is improved.

AbbVie's situation is similar to that of rebirth yuan, which will not be repeated here. According to Bloomberg's statistics, the healthcare ETF received a record inflow of funds in the first quarter:

It seems that the safe haven of US stocks in 2022 must be medical care!$Costco(COST)$ $Wal-Mart(WMT)$ $Regeneron Pharmaceuticals(REGN)$ $AbbVie(ABBV)$